South Africa: PMI increases in November
The S&P Global Purchasing Managers’ Index (PMI) rose to 50.0 in November from October’s 48.9. Consequently, the index laid at the 50.0 no-change threshold, signaling stable private-sector operating conditions from the previous month.
November’s improvement was driven by cooling price pressures as the rates of input and selling cost inflation fell to multi-month lows. The slowdown in inflation drove smaller contractions in output and new orders: Domestic demand conditions seemingly improved, spurring an increase in the length of delivery times. With regard to supply chain conditions, the port crisis continued to weigh on supplier performance—which saw the worst reading year-to-date as lead times increased.
Less positively, weak external conditions weighed on export sales, which continued to decline in the recorded period. Meanwhile, employment levels decreased after three back-to-back expansions, driving a decrease in wage cost inflation. Lastly, business sentiment improved in the month, reflecting expectations of more favorable inflation, demand and supply conditions.
David Owen, senior economist at S&P Global, referred to the port crisis—specifically in Durban—as a downside risk to activity:
“Tens of thousands of shipping containers are awaiting offloading, causing significant delays. Anecdotal evidence from companies indicated that these delays led to the steepest lengthening of delivery times in almost a year, contributing to falls in purchasing and output. The crisis could therefore act as a drag on private sector growth in the coming months if there is no improvement.”